LOWELL -- The City Council has designated the site of the former Freudenberg Nonwovens building as an area targeted for economic growth in hopes of helping the building's owner attract commercial tenants.

In addition to declaring 110 Canal St. an "Economic Opportunity Area," the council also voted Tuesday to authorize a tax-incentive agreement with the property's owner, Trinity Financial.

City and Trinity officials sought the council's action because it allows the company to petition the state to secure a tax deduction for the costs to rehab the 55,000 square-foot property in the Hamilton Canal District downtown.

The "Abandoned Building Tax Deduction" allows parties that redevelop buildings that have been substantially vacant for at least two years to claim a state tax deduction of 10 percent of their qualified investment costs.

Adam Baacke, the city's assistant city manager, said if the state approves the abandoned building tax deduction, Trinity's costs to rehab the building will be reduced.

The savings could then be passed on to potential tenants through lower rent payments because Trinity will not need as much rent income to cover the debt and operating costs for the project, he said.

"The City and Trinity both believe that these tax benefits will enable (Trinity) to make more attractive offers to prospective tenants, including those that they are currently negotiating with than would otherwise be possible without the tax benefits," Baacke said in written statement.

Filling the Freudenberg building is the next major step for Trinity's $800 million redevelopment of the Hamilton Canal District.

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Trinity rehabbed the Freudenberg building "on-spec," or without tenants lined up. The "core and shell" rehab cost $8.5 million.

Abby Goldenfarb, Trinity's project manager for the district, said Trinity is always supportive of taking steps, such as pursuing tax incentives, that will allow it to be more competitive when seeking tenants.

Goldenfarb said so far tenants in various industries have expressed interest in leasing space in the building. Those with interest include technology companies, as well as businesses in the retail and restaurant industries.

Trinity is hopeful to secure its first tenant for the building in the near future and others not long after, said Goldenfarb.

The work to transform the building's flaky orange exterior into a sharp, three-shades-of-tan scheme reflecting the structure's concrete core is a big reason interest in the property has increased, said Goldenfarb.

"The market seems to be getting stronger and the property has turned out to be an extremely attractive building," Goldenfarb said. "We are feeling good about the prospects for the building."

The rehab of the exterior of the building was completed months ago and the interior, including the lobby, should be complete by mid-June, said Goldenfarb. Trinity plans to host a brokerage event at the site June 13.

City Councilor John Leahy, a member of the council's economic development subcommittee, said he supported the two proposals before the council regarding 110 Canal St. to help move the Hamilton Canal project forward.

"If there are tax incentives to assist the developer in finishing the project and get tenants for a building, we should help the developer get them," Leahy said. "We just want to keep the whole effort moving along."

The tax-incentive agreement the council approved with Trinity was a tax-increment financing plan agreement, known as a TIF. Such agreements typically allow for a local-option property-tax abatement on all or part of the increased property value resulting from improvements made to eligible properties.

But Baacke said the state deduction for abandoned properties does not require a local property-tax abatement also be given.

Other companies in the city that have taken advantage of the abandoned building tax deduction are Nobis Engineering and Cristek Interconnects Inc.

There have also been companies in other local communities who benefited from the state tax deduction program in recent years. They include Thermo Fisher Scientific Inc. in Tewksbury, Keurig Inc. in Burlington and FIBA Technologies in Littleton, a global manufacturer of high-pressure gas containment equipment.

Lowell officials have also helped different sites in the city become eligible for a wide variety of state benefits in hopes of bolstering economic development.

One example was the council's 2008 vote to put the former Prince Macaroni factory on a state list of preferred-development sites.

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